Employers in Kazakhstan are responsible for several payroll-related taxes and contributions. These include:

Social Tax

This tax is levied at a rate of 9.5% on the employee's gross salary and is entirely paid by the employer.

Social Contributions

Employers are required to pay a 3.5% social contribution based on the gross salary of Kazakhstani citizens. This requirement does not apply to expatriates who do not have permanent residency in Kazakhstan.

Obligatory Pension Contributions (OPC)

All employers must contribute 10% of the employee's gross salary to the pension fund. This is withheld from the employee's pay, and the employer is not responsible for any additional payment.

Obligatory Professional Pension Contributions (OPPC)

For employees working in jobs with harmful working conditions, employers must make an additional contribution of 5% of the employee's gross salary to a professional pension fund.

Obligatory Medical Insurance Contributions

Employers pay 3% of a Kazakhstani citizen's gross salary (2023 rate), while employees contribute 2%.

Corporate Income Tax (CIT)

The standard CIT rate in Kazakhstan is 20%. CIT is based on a company's taxable income, which is calculated as aggregate annual income minus deductible expenses.

Other Taxes and Contributions

Employers may also be responsible for additional contributions depending on the nature of their business. These can include:

• Individual Income Tax (IIT): Employers must withhold IIT from employees' salaries at a flat rate of 10%.
• Property Tax
• Land Tax
• Vehicle Tax

Payment Deadlines

Payroll-related taxes and contributions are generally due on a monthly basis, no later than the 25th day of the month following the reporting month. CIT is paid annually, and there are potential advance payment requirements for larger taxpayers.

In Kazakhstan, employees are subject to a flat 10% personal income tax rate on their salary and other employment income. This tax is withheld by employers each month.

Obligatory Pension Contributions (OPC)

Employees have 10% of their gross salary deducted as a contribution toward their pension fund. This is withheld by employers and submitted to the pension fund.

Obligatory Social Health Insurance (OSHI)

Employees contribute 2% of their gross salary (2023 rate) to the Social Health Insurance Fund. This is also withheld by employers and submitted regularly.

Standard Deductions

Tax resident employees in Kazakhstan are eligible for a standard tax deduction. The amount of this deduction is currently based on 14 times the Minimum Calculation Index (MCI).

Additional Deductions

Employees may be eligible for other deductions under specific circumstances. These may include:

• Insurance Premiums: Premiums paid under certain life insurance and annuity contracts.
• Medical Expenses: Some medical expenses may be deductible up to a specific limit.
• Mortgage Interest: Interest paid on a housing loan may be deductible.

It's recommended that employees consult a tax advisor in Kazakhstan to determine their specific eligibility for deductions and to ensure they are claiming all potential benefits.

In Kazakhstan, Value-Added Tax (VAT) is a significant part of the tax system, applying to the sale of goods, works, and services. This guide will delve into the VAT implications for service providers in the country, including rates, exemptions, and recent changes for electronically supplied services.

VAT Rates

The standard VAT rate in Kazakhstan is currently 12%. This rate is applicable to most taxable services provided within the country.

VAT Exemptions

Several services are exempt from VAT in Kazakhstan. These include essential services such as financial services provided by authorized institutions, educational services, medical and veterinary services, and the sale of pharmaceuticals. Additionally, the sale of land and residential buildings is exempt from VAT.

A zero VAT rate applies to exports of goods, specific international transportation services, and the sale of goods/services to companies registered in a special economic zone.

VAT on Electronic Services

A significant change introduced in 2022 concerns electronically supplied services. Foreign companies supplying electronic services or goods to Kazakh individuals are now liable to register for VAT in Kazakhstan and pay VAT at the standard 12% rate. This applies to services like software licenses, online games, website hosting and maintenance, and data storage services provided electronically.

It's important to note that foreign suppliers are not required to register for VAT if the value of the electronic goods or services is included in the official import value and import VAT has already been paid.

Understanding VAT implications is crucial for service providers operating in Kazakhstan. The standard VAT rate is 12%, with exemptions for specific services and a zero rate for exports and certain other transactions. Recent changes require foreign suppliers of electronic services to register for VAT and comply with VAT regulations.

Agricultural businesses that produce qualifying products enjoy a reduced Corporate Income Tax (CIT) rate of only 6%. Additionally, businesses located within designated Special Economic Zones (SEZs) may be entirely exempt from paying CIT, subject to certain conditions.

Investment Incentives

The Investment Tax Credit mechanism provides flexibility in tax payment deadlines. It can also potentially reduce tax payments by 100% or offer payment in installments for those who meet eligibility criteria. Furthermore, when entering into an "Agreement on Investment Obligations" under the Entrepreneurial Code, businesses can secure a stable tax regime for up to ten years. This protects them against fluctuating tax regulations.

Land and Property Tax Exemptions

Businesses operating within Special Economic Zones are eligible for the following exemptions:

• Land Tax: 0% rate.
• Property Tax: 0% rate, unless the property generates rental or trust management income.

Alternative Tax

An alternative tax option may apply to specific subsurface contracts within the oil and gas industry. This replaces certain other taxes, such as the Excess Profits Tax (EPT).

Other Potential Incentives

For three years, new manufacturing enterprises may be tax-exempt. This is a provision within Kazakhstan's new Tax Code. Additionally, Kazakhstan is taking steps to safeguard intellectual property rights, bolstering the investment environment for businesses dependent on those protections. The government may also provide various subsidies for businesses within the agricultural sector.

It's recommended to consult with professional tax advisors in Kazakhstan to get the most up-to-date and tailored advice regarding your business eligibility for specific tax incentives.